Equalized Valuations (EQVs), September 2004 (v.7, n.5)

What are equalized valuations?

Equalized Valuations (EQVs) are "an estimate of the FFCV [ Full and Fair Cash Value, see definition below] of all property in the Commonwealth as of a certain taxable date. EQVs have historically been used as a variable in distributing some state aid accounts and for determining county assessments and other costs. The Commissioner of Revenue, in accordance with MGL Ch. 58 §10C, is charged with the responsibility of biannually determining an equalized valuation for each city and town in the Commonwealth." [Municipal Glossary.Massachusetts Department of Revenue, Division of Local Services, Municipal Data Management and Technical Assistance Bureau. February 2003]

Full and Fair Cash Value (FFCV) "has been defined by the Massachusetts Supreme Judicial Court as 'fair market value, which is the price an owner is willing but not under compulsion to sell ought to receive from one willing but not under compulsion to buy. It means the highest price that a normal purchaser not under peculiar compulsion will pay at the time, and cannot exceed the sum that the owner after reasonable effort could obtain for his property. A valuation limited to what the property is worth to the purchaser is not market value. The fair cash value is the value the property would have on January first of any taxable year in the hands of any owner, including the present owner' (Boston Gas Co. v. Assessors of Boston, 334 Mass. 549, 566 (1956). [ibid.]

Equalized valuations are part of the disbursement formula for the Municipal Equalization Grant (MEG) of the State Aid to Public Libraries program. This formula is:

Municipal Equalization Grant = [( X Y · X )/ Sigma ( X Y · X) ]  · SEG
Where, X = municipal population as percent of the state population,
Y= municipal Equalized Valuation as percent of statewide equalization,
Sigma = the sum of, and SEG = statewide equalization grant (the total funds available for distribution).

Thus, individual municipal equalization grants are calculated as follows: First, the municipal population as a percent of the state population and the municipal equalized valuation as a percent of statewide equalization are calculated for each municipality. Second, a municipality's population percentage is divided by it's EQV percentage and the result multiplied by its population percentage. Third, the second step is done for all municipalities and the results are summed. Fourth, the result for each community (second step) is divided by the statewide result (third step). Finally, the total available for the MEG is multiplied by the last calculation (step four). This process is repeated for each municipality to determine its Municipal Equalization Grant.

Prepared by Dianne L. Carty, Head of State Aid and Data Coordination

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